Treasurys mostly rise as investors look for safety
NEW YORK — Investors maneuvered into the safety of government debt Tuesday as they worried about the health of the economy.
The stock market retreated and Treasurys mostly rose as investors questioned how long it will take for the economy to produce definitive signals that it is recovering from the recession that began in December 2007.
The rise in prices sent the yield on the benchmark 10-year Treasury note to its lowest level in six weeks — an encouraging sign for consumers since yields of long-term Treasurys are linked to interest rates on mortgages and other consumer loans.
Mixed results from a Treasury Department auction of $35 billion in three-year notes briefly cut into some of the gains. The yield on the notes was higher than some traders had expected but indicators of demand signaled that there was still an ample supply of buyers.
The government paid a yield of 1.51, above the yield of 1.44 percent late Monday but below the approximately 1.88 percent from an auction last month.
The higher yield meant the government had to offer a greater return to entice buyers.
Treasury prices slid in June and yields rose as investors grew nervous that the pace of debt streaming from Washington would sap demand. The government is holding the auctions to pay for its plans to revive the economy and stabilize the financial industry.
Despite the unease, auctions in the past month have in general drawn what many traders see as an acceptable level of interest.
With few economic signs to give further insight into the strength of business early this week, investors are also jittery ahead of a rush of corporate earnings for the April-June quarter. Disappointing corporate profits or cautious forecasts could boost demand for Treasurys.
The mixed auction results Tuesday follow solid demand at a sale Monday of $8 billion in 10-year Treasury Inflation-Protected Securities, or TIPS.
The benchmark 10-year Treasury note rose 16/32 to 97 8/32, sending its yield down to 3.46 percent from 3.51 percent late Monday. It was the yield’s lowest level since May 25.
The 30-year bond rose 26/32 to 99 and its yield fell to 4.31 percent from 4.36 percent.
The two-year note slipped 1/32 to 100 9/32 and its yield edged up to 0.98 percent from 0.95 percent.
The yield on the three-month T-bill was unchanged at 0.17 percent. Its discount rate was 0.18 percent.
The cost of borrowing between banks slipped. The British Bankers’ Association said the rate on three-month loans in dollars, which is known as the London Interbank Offered Rate, or Libor, fell 0.01 of a percentage point to 0.54 percent.
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